What Role for Public Finance in International Climate Change Mitigation

OECD Roundtable for Sustainable Development Discussion Paper No. SG/SD/RT(2008)3

41 Pages Posted: 31 Oct 2008

Date Written: October 29, 2008

Abstract

The level of investment required to finance carbon mitigation projects to stabilize carbon emissions at current levels is estimated to be in the order of USD 200-210 billion annually (UNFCCC 2007). The IEA estimate about around USD 150 billion needs to be invested annually between 2010 and 2050 in the early deployment of new technologies.

This paper considers this challenge in the context of the investment needed in developing countries under a post-2012 global agreement. Firstly, we consider possibilities for raising this scale of finance amongst developed countries in a short time frame and offer insights on some innovative financing approaches. Secondly, we discuss what policy approaches are needed to ensure that public finance is used in the most efficient and cost-effective manner towards catalysing major technology change. We conclude that early stage deployment and R&D financing are significant gaps in the innovation chain which public institutions need to address to achieve the greatest impact for public financing in clean energy investment.

Keywords: public finance, climate change mitigation, developing countries, venture capital

JEL Classification: H2, H5, 03

Suggested Citation

Doornbosch, Richard and Knight, Eric R. W., What Role for Public Finance in International Climate Change Mitigation (October 29, 2008). OECD Roundtable for Sustainable Development Discussion Paper No. SG/SD/RT(2008)3. Available at SSRN: https://ssrn.com/abstract=1291763 or http://dx.doi.org/10.2139/ssrn.1291763

Richard Doornbosch

OECD ( email )

2, rue André Pascal
F-75775 Paris Cedex 16
Paris Cedex 16, 75775
France

Eric R. W. Knight (Contact Author)

University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
Australia

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